By Julie Haviv NEW YORK, June 4 (Reuters) - The euro rebounded against thedollar and the yen o n M onday as investors pared bearish bets onhopes that European authorities may be able to keep the regionintact, although Spain's ailing banks and slowing global growthshould cap the currency's gains. The euro, which was ripe for a bounce given a record high innet speculative short positioning, was buoyed by news thatFrance and the European Commission signaled their support for anambitious plan to use the euro zone's permanent bailout fund torescue stricken banks. Separately, finance ministers and central bank governors ofthe Group of Seven leading economies will hold a conference callon Tuesday morning to discuss the European debt crisis. Butthere will be no Group of 20 ministerial call. While European officials are trying to reassure investorsthey can contain an escalating crisis, many market participantsremain bearish on the single currency and believe the euro'sstrength should prove temporary. "On immediate glance this small bounce in euro/dollar looksvery similar to the corrective bounce witnessed in mid-May,which subsequently failed and opened the door for a move toFriday's low at $1.2286," said Gareth Sylvester, director atKlarity FX in San Francisco. "Accordingly, we would not put any real faith in aeuro/dollar low having been set at this stage," he said. "Infact we would really need to see a break back above $1.2625/35to begin to suggest that a short-term low had been seen andprompt a deeper correction." The euro last traded 0.4 percent higher at $1.2482,up from $1.2286 on Friday, its lowest since July 2010. Monday'speak of $1.2509 was a four-day high. With London markets closedfor a bank holiday, volume was thin until the New York session. From a medium-term perspective, the broader risks suggestthat the euro may head toward $1.20 and $1.18, Klarity FX'sSylvester said. Against the yen, the euro traded up 0.9 percent at97.86 yen, well above Friday's 11-1/2-year low of 95.57 yen,according to Reuters data. Comments from European Central Bank policymaker EwaldNowotny saying he supported the idea of a European banking uniongave the euro an early boost. Spanish Prime Minister Mariano Rajoy on Saturday called forthe establishment of a central authority to oversee fiscalpolicy in the euro zone, while Germany wants a big leap forwardin euro integration. More insight on potential monetary easing may come fromWednesday's European Central Bank meeting, and markets arepositioning for an outside chance of a rate cut. "The outlook of the euro will depend on how ready andwilling the European Central Bank is to provide stimulus to theEuropean economy," said Kathy Lien, director of currencyresearch at GFT in Jersey City. "They (the ECB) have made itclear that they want the solution to come from Europe's leaders,but the recent deterioration in economic data and slide in assetprices makes easier monetary policy inevitable." On Thursday, Federal Reserve Chairman Ben Bernanke testifiesbefore a congressional committee about the U.S. economy.Friday's weak U.S. labor market data has raised expectations ofmore Fed quantitative easing, a negative for the dollar. Against the yen, the dollar rose 0.3 percent to 78.30 yen, off Friday's trough of 77.65, its lowest sincemid-February.